Jain Irrigation up 7%, hits fresh 52-week high as F&O ban lifted; what else is driving the stock?

Jain Irrigation Systems surged over 7% in the intraday trade today after the reported lifting of the ban on the stock’s futures & options trading.

Jain Irrigation shares were trading steady at Rs 116.5 on BSE, up 5% from the previous close, after hitting a fresh 52-week high of Rs 119.8 on Tuesday’s opening. (PTI Photo)

Jain Irrigation Systems surged over 7% in the intraday trade today after the reported lifting of the ban on the stock’s futures & options trading. The company’s shares were trading steady at Rs 116.5 on BSE, up 5% from the previous close, after hitting a fresh 52-week high of Rs 119.8 soon after Tuesday’s opening.

Earlier last week, Jain Irrigation said that it has agreed to acquire 80% equity stake in two micro-irrigation companies in the US with an investment of $48 million, following which, the shares had surged over the next two trading sessions.

Shares of Jain Irrigation, a well-known Indian multinational company engaged in manufacturing and installing irrigations systems, tools and equipment, have rallied about 94% since the low of Rs 60 in April last year, vastly outperforming the benchmark Nifty and NSE Midcap indices.

The company management had said that with the new acquisitions in the US, it expects to get a foothold in the distribution of equipment, giving it an opportunity to deal directly with the farmers. Further, the company had said in an interview with CNBC TV18 that the margins of the irrigation business of the two companies were higher than that of Jain Irrigation.

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Soon after the US acquisition, the stock had received further boost on the company winning a Rs 570 crore order from the Karnataka government, with the company management expressing hope of getting more similar orders going ahead.

“I think you will see in the next few quarters, we should be also getting more orders like these from other states. This was in Karnataka, but then there are orders coming from Maharashtra, Madhya Pradesh, Punjab, there are multiple states which are now embarking on this issue because water is short and water is required by the farmer and government is making that structural change to make it more efficient irrigation. That is where we are going to play an important role,” Jain Irrigation Systems MD Anil Jain said in a recent interview to CNBC TV18.

Also, the company reduced its debt in the last financial year from 5X EBITDA in March 2016 to 4X in March 2017, and going ahead, it expects to cut it further to 3X by the end of the current financial year 2017-18, Jain had said. “Overall in the current year, you will see further reduction in the debt because overall we want to go for that kind of a sustainable level on the debt where debt equity we are planning to target less than 1:1,” he said.